Embryos regulate their growth and development in many ways, but control of gene transcription is one of the most important for directing cells along different developmental pathways. In Drosophila, a cascade of nuclear regulatory events establishes very early differences in cell fates by producing intricate patterns of gene expression. Many of these pattern forming genes encode DNA binding proteins which regulate each other's expression, and subsequently instruct the rest of the genome in a manner appropriate to each position in the organism. Recent evidence suggests that many of these regulatory proteins are conserved across the evolutionary distance separating flies and humans, both in terms of primary structure, implying similarity in mechanism, and, at least to some extent, in terms of their developmental "meaning", that is, how the regulatory scheme in which they are embedded solves the common problems of a developing multi-cellular organism. Therefore, a detailed understanding of the interactions of conserved regulators in one system is likely to have important implications for their homologs in other systems. There appears to be a juncture in the study of embryogenesis where it is important to establish specific mechanisms of two types. First, which gene products interact directly with which other genes or gene products; and second, what are the specific molecular consequences of those interactions. This proposal will contribute to the understanding of such mechanisms by focusing on the interactions and function of two homeodomain (HD) containing transcriptional regulators involved in pattern formation in Drosophila. One, Engrailed (En), activates its own gene and represses several other genes in embryos, and has been shown to possess a transcriptional repression activity in cultured cells. The other, Ftz, activates a number of genes, including its own (ftz), in an interaction that is thought to be direct, and possesses a strong transcription activation function in cultured cells. A chimeric protein in which the En HD is replaced by the Ftz HD, like En, behaves as a repressor in cultured cells. When this protein is expressed in embryos, it interacts with the ftz gene, repressing it. By dissecting the requirements for two specific interactions, activation by En of its own gene and repression of the ftz gene by the chimeric protein, this study will address the question of how the target genes of HD-containing regulators are recognized and controlled in Drosophila embryos and thereby elucidate mechanisms of transcriptional regulation in a complex developmental environment.